SiriusXM Confirms $265M Acquisition of Podcast Platform Stitcher

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Following reports of the acquisition last week, SiriusXM has confirmed its plans to purchase podcast platform Stitcher from E.W. Scripps Co. for $265 million -- helping the satellite radio giant carve out a space in the growing podcast industry against rival Spotify.

The deal follows SiriusXM's acquisition of podcast hosting and distribution company Simplecast last month, and its 2019 purchase of online radio platform Pandora, where podcasters can upload their shows for distribution among its 61 million monthly listeners. Meanwhile, Spotify in February purchased sports media outlet The Ringer (a company known for its podcast network including The Bill Simmons Podcast) -- marking Spotify's fourth podcast-related purchase of the last 12 months, after its acquisitions of Anchor, Gimlet Media and Parcast. In mid-June, Spotify also announced an exclusive podcasting deal with Kim Kardashian West and multi-year, multi-project podcasting pact with Warner Bros.

"The addition of Stitcher is an important next step as we continue to develop and strengthen our offering in the fast-growing podcasting market,” SiriusXM CEO Jim Meyer said in a press release. "With Stitcher, we will expand our digital audio advertising presence and look to generate new ways for creators to find and connect with their audiences. Stitcher has a talented team with deep experience in the podcast space, and we look forward to working with them to better meet the needs of creators, advertisers, and listeners."

Top Stitcher podcasts include Freakonomics Radio, My Favorite Murder, How Did This Get Made?, SuperSoul Sunday from The Oprah Winfrey Network and Office Ladies. In addition to the Stitcher app, which has a premium, ad-free subscription service, the company also owns advertising arm Midroll Media.

Under the agreement, SiriusXM will potentially make up to $60 million in additional contingent payments, based on Stitcher achieving certain financial goals in 2020 and 2021. Guggenheim Securities, LLC is serving as financial advisor to SiriusXM and Weil, and Gotshal & Manges LLP is serving as its legal counsel.

With the acquisition, which is expected to close in the third quarter of 2020, SiriusXM says that its combined properties will reach over 150 million listeners in the U.S. across all categories of digital audio (music, sports, talk and podcasts).

"With our team’s collective expertise in digital audio, analytics and ad tech, plus Stitcher’s deep experience in podcasting, I see significant opportunities ahead," Meyer added in an internal note to employees this morning. "Together, we can create a transformative one-stop shop to better meet the needs of podcast creators, publishers and advertisers -- while also providing listeners with new ways to find and connect with great shows."

Investors don't believe SiriusXM has the mojo of streaming-only companies like Spotify and Tencent Music Entertainment. Its shares have dropped 19.4% year to date after SiriusXM pulled its 2020 guidance and warned a slowdown in auto sales, among other factors, could impact this year's earnings.